Gerald F. Smith, Jr.
About Gerald F. Smith, Jr.
Gerald F. Smith, Jr. (age 63) is Vice Chairman and Secretary of FXNC’s Board and has served as a director since 2007; he is a Certified Public Accountant (licensed since 1986) and is designated by the Board as the company’s audit committee financial expert under SEC rules . Smith previously served as Chairman, Chief Executive Officer, and President of Valley Proteins, Inc. until his retirement following the sale of the business; he has held industry leadership roles and serves on local boards, reflecting finance and accounting depth and community ties .
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| Valley Proteins, Inc. | Chairman, CEO & President | Until retirement following sale (dates not disclosed) | Led a rendering business; finance/accounting expertise recognized |
| North American Renderers Association | Chairman | Not disclosed | Industry leadership |
External Roles
| Organization | Role | Tenure | Notes |
|---|---|---|---|
| Shenandoah University | Board of Trustees member | Not disclosed | Shared external board interlock: James R. Wilkins, III also serves as trustee |
| Glass Glen Burnie Foundation | Board of Trustees member | Not disclosed | Community leadership |
Board Governance
- Independence: The Board determined Smith is independent under Nasdaq standards .
- Roles: Chair of the Compensation and Governance Committee; member of the Audit Committee; designated audit committee financial expert .
- Attendance and engagement: Board met 11 times in 2024; each incumbent director attended >75% of Board and committee meetings of which they were a member .
- Committee cadence: Audit Committee met five times in 2024 .
- Board leadership: Listed as Vice Chairman and Secretary in the 2025 proxy .
Fixed Compensation (Director)
| Component | Structure | Amounts (2024) |
|---|---|---|
| Board retainer (non-employee directors) | $2,362.50 per month; no meeting fees | $28,350 annual equivalent |
| Vice Chairman additional retainer | $105 per month | $1,260 annual equivalent |
| Chair of Board additional retainer | $875 per month (for Chair; Smith is Vice Chair) | Not applicable to Smith |
| Fees Earned or Paid in Cash – Smith | Actual cash paid in 2024 | $30,182 |
Note: FXNC pays monthly retainers and does not pay meeting fees; Smith’s actual fees modestly exceeded annual equivalents, consistent with disclosed structure .
Performance Compensation (Director Equity)
| Grant Type | Grant Date | Grant-Date Fair Value per Share | Smith: Grant-Date Fair Value | Implied Shares |
|---|---|---|---|---|
| Unrestricted Common Stock (SIP) | Aug 14, 2024 | $16.80 per share (closing price) | $25,200 | 1,500 shares (calculated: $25,200 ÷ $16.80) |
| Unrestricted Common Stock (SIP) | Nov 20, 2024 | $22.94 per share (closing price) – for newer directors Lee-Andrews, Wagstaff, Wilkinson | Not applicable to Smith | Not applicable |
| Aggregate board grants (all directors) | 2024 | — | — | 14,625 unrestricted shares granted across Board |
- Vesting: Directors held no unvested stock awards outstanding as of Dec 31, 2024 .
- Equity program: FXNC grants unrestricted common stock to directors as deemed appropriate for service and support .
Other Directorships & Interlocks
| Entity | Type | Overlap/Interlock | Potential Conflict Consideration |
|---|---|---|---|
| Shenandoah University | Non-profit | Smith and Wilkins both trustees | Shared external board affiliation; no related-party issue disclosed |
| Glass Glen Burnie Foundation | Non-profit | Smith trustee | No conflicts disclosed |
No current public company directorships for Smith were disclosed in FXNC’s proxy .
Expertise & Qualifications
- CPA (licensed since 1986); designated audit committee financial expert per SEC definitions .
- Former CEO/Chair with deep operating and financial oversight experience in industrial processing (rendering) .
- Community and board leadership roles enhancing governance perspective .
Equity Ownership
| Holder | Shares Beneficially Owned | % of Class | Notes |
|---|---|---|---|
| Gerald F. Smith, Jr. | 402,791 | 4.48% | Includes 900 indirect shares; Smith disclaims beneficial ownership of 900 shares held in trust for his child |
| Shares subject to acquisition within 60 days | 0 | — | No such rights for any executive/director per table footnote |
| Pledged shares | Not disclosed | — | No pledging disclosure; Company lacks anti-hedging policy |
- Anti-hedging: The Company currently has no anti-hedging policy covering derivative or hedge transactions in its common stock, a governance gap for alignment .
Insider Trades (Section 16)
| Item | Date/Period | Detail |
|---|---|---|
| Late Form 4 filing – Smith | Fiscal year 2024 | Company noted one late Form 4 filing for Mr. Smith (and Mr. Wilkins); otherwise directors complied with Section 16(a) requirements |
Related Party Transactions & Conflicts
- Director/officer loans: Aggregate balances to directors, executive officers, and related interests totaled $3.6 million as of Dec 31, 2024 (≈2% of Company equity); loans originated in the ordinary course on substantially the same terms as comparable non-related transactions; Board has formal review/approval policy for related-party transactions and conflicts .
- Independence statement: The Board reviewed nonprofit sponsorships and concluded such relationships did not impair any director’s independence under Nasdaq standards .
Governance Assessment
-
Strengths
- Independent director with financial expertise; designated audit committee financial expert, bolstering audit oversight .
- Significant ownership (4.48%), signaling alignment; no unvested director awards outstanding at year-end .
- Active governance role: Chair of Compensation & Governance Committee; member of Audit Committee; consistent attendance >75% with 11 Board meetings and 5 Audit meetings in 2024 .
-
Watch items / RED FLAGS
- Late Form 4 filing in 2024 indicates a minor compliance lapse; monitor future timeliness .
- Company’s lack of anti-hedging policy is a governance gap that could allow directors to hedge economic exposure, potentially weakening alignment .
- Combined influence signals: Vice Chairman and Chair of Compensation & Governance may concentrate governance authority; ensure robust independent processes and advisor independence (Pearl Meyer engaged for executive comp review, albeit in 2021) .
- Routine director/officer lending is common in community banking but warrants ongoing scrutiny for preferential terms; FXNC discloses ordinary-course terms and Board oversight .
-
Compensation alignment
- Director pay is primarily fixed cash retainer plus unrestricted stock grants; no meeting fees and modest Vice Chair premium support cost discipline and service recognition .
- Equity grants as unrestricted shares (e.g., $25,200 at $16.80/share) imply tangible ownership rather than deferred equity or options, reinforcing skin-in-the-game without complex performance metrics for directors .
-
Shareholder engagement
- Say-on-pay proposals and frequency vote presented in 2025; committee indicates consideration of shareholder feedback; historical approval percentages not disclosed in the proxy .
Appendix: Director Compensation Detail (2024)
| Name | Fees Earned or Paid in Cash | Stock Awards | Total |
|---|---|---|---|
| Gerald F. Smith, Jr. | $30,182 | $25,200 | $55,382 |
Grant mechanics: Equity awards valued at closing price on grant date (Aug 14, 2024: $16.80 per share), implying 1,500 shares for $25,200; separate Nov 20, 2024 grant at $22.94 for certain newly added directors (not applicable to Smith) .
Appendix: Committee Memberships (2024)
| Committee | Role | Independence/Qualifications | Meetings (2024) |
|---|---|---|---|
| Compensation & Governance | Chair (Smith) | Independent | Not disclosed |
| Audit | Member (Smith) | Independent; Audit Committee Financial Expert (Smith) | 5 meetings |
Appendix: Board Attendance (2024)
| Metric | Value |
|---|---|
| Board meetings held | 11 |
| Smith attendance rate | >75% (each incumbent director achieved ≥75%) |
Notes on Executive Compensation Governance (context for Smith’s committee oversight)
- Compensation consultant: Pearl Meyer engaged in 2021 to review executive compensation competitiveness and structure; ongoing philosophy emphasizes performance-based pay and alignment .
- Clawback policy: Adopted in 2023 for executive officers covering three prior fiscal years in the event of a material restatement; director clawbacks not specified .
- EIP performance metrics (2024 awards paid March 2025): targeted EPS, efficiency ratio, new deposit sales, net deposit balances change; adjusted performance at 110% of target leading to cash awards for executives (context for committee oversight; directors not participants) .